In a job order cost accounting system, the effect of the flow of direct materials into production will be:
A) increase in Work-in-Process and decrease in Materials Inventory.
B) increase in Materials Inventory and decrease in Work-in-Process.
C) increase in Factory Overhead and decrease in Materials Inventory.
D) increase in Work-in-Process and decrease in Supplies.

Question

Quizplus · Accepted Answer

When direct materials flow into production, it means they are being used to produce a product. As a result, there will be an increase in the Work-in-Process account, as the product is a work in progress. At the same time, there will be a decrease in the Materials Inventory account, as materials are no longer sitting idle and have been put to use. Therefore, A is the correct answer.

In a Job Order Cost Accounting System, the Effect of the Flow